Hong Liang Lu
Engineer , Billionaire and
CEO and President of UTStarcom Inc
Hong Lu: CEO & President of UTStarcom Inc.
(Pronounced: "Hong Lyahng Loo")
CEO & President of UTStarcom Inc.
Hong Lu, a Taiwanese-born, American-educated entrepreneur, founded Unitech Industries in 1991 (renamed Unitech Telecom in 1994) with several Bell Labs engineers. The company aimed to develop digital and wireless transmission systems to serve developing nations busy building up their communications infrastructures. Lu focused on the rapidly developing Chinese telecom market, aware that that market would become the largest in the world by 2010, given the existing rate of telephone line construction.
Already an experienced entrepreneur, Lu was confident that he could compete with telecom giants such as NEC, Motorola, Ericsson, AT&T, Northern Telecom, and Siemens AG.
In a strategic move, Lu helped orchestrate the merger of his California-based company with New Jersey-based Starcom Network Systems Inc., a developer of intelligent network systems, in 1995. While Unitech dealt primarily with local level infrastructure, Starcom had relationships at the provincial and national levels. The new company, UTStarcom, thus expanded its coverage, increased its financial resources, and became more attractive to investors.
Luís personal ties to Japanese billionaire Masayoshi Son, a fellow alumnus of the University of California at Berkeley and head of Softbank Corporation, raised US$30 million for the company. Lu has sought to combine an internationalized investment background with leveraging market and manufacturing interests in China.
Luís vision for his company is largely responsible for its success. UTStarcom brings American fiber optics technology to emerging nations, tailoring products directly to their telecom and data communications needs. At its two manufacturing bases in Guangdong and Zhejiang provinces, the company produces its own switching equipment, server software, and systems that facilitate the interface of different telecom networks. Its wireless technology is superior to conventional copper wire, which is slow and costly to install. Lu explains that getting a standard, landline phone in China can take six months, so his company takes advantage of the consequent demand for mobile phones and pagers.
While UTStarcom is not as famous as some of its competitors, it enjoys a number of advantages. For one thing, since the executives are all Asian-born, UTStarcom is more attuned to local customs and is able to function as a domestic company. Lu and the three other founders are ethnic Chinese educated in the United States, and many of the engineers were hired locally. The ethnic link helps convince Chinese officials that UTStarcom is devoted to the China market and is eager to forge long-term partnerships.
Lu clearly understands the Chinese market, and the importance of establishing high-level connections with government organizations. Since telecom operators in China may not be foreign-owned, Lu helped form a number of joint ventures with state-owned firms. One of the most significant of these was the establishment of a partnership with the Guangdong Post and Telecom Bureau in 1996, to form the Guangdong UTStarcom Telecom Co. Ltd., which makes and markets telecom access equipment.
Under Lu, the company has also been working on setting up marketing alliances at the national level. Other important customers include state-owned railroads, the oil industry, and the power industry. In 1995, Lu, along with his friend Son of Softbank, helped arrange a profit-sharing agreement with Jitong Communications Co. Ltd., a consortium headed by the Chinese Ministry of Electronics Industry, to provide Internet infrastructure and services in 24 Chinese cities.
Currently, 90% of the companyís business comes from the Chinese market. Lu acknowledges the inherent disadvantages of solely focusing on the China market. Therefore, he hopes that within a few years, 20% of the companyís sales will come from outside China, including Africa, Latin America, and Eastern Europe.
Hong Lu, born in Taiwan in the 1950s, received a B.S. in Civil Engineering from the University of California at Berkeley and speaks Mandarin, Cantonese, Japanese and English. To support his graduate studies, Lu served as the night-shift manager of an ice-cream parlor in Oakland California, where he met fellow Berkeley student and future business associate, Masayoshi Son, the Japanese billionaire who now heads Softbank Corporation, and who bought 30% of UTStarcomís shares.
From 1983 until 1986, Lu was President and CEO of Unison World, Inc., a software development company that merged with Kyocera International, Inc. in 1986. Lu then served as President and CEO of the majority-owned subsidiary of Kyocera International, Kyocera Unison. Later, Lu helped found Unitech Telecom Inc. in 1991 with several Bell Labs engineers.